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June 22, 2021

Exclusive interview with Mark Robson, Head of e-Gaming, Isle of Man’s Department of Economic Development

“Isle of Man is home to world leading gaming operators”

“Isle of Man is home to world leading gaming operators”
A recent Isle of Man’s government report showed that Information and Communication Technology and e-Gaming grew by 58% and 30% respectively in real terms. Mark Robson talked with Yogonet about the benefits of using Bitcoin and the e-Gaming development t
Isle of Man | 09/28/2015

A recent Isle of Man’s government report showed that Information and Communication Technology and e-Gaming grew by 58% and 30% respectively in real terms. Mark Robson talked with Yogonet about the benefits of using Bitcoin and the e-Gaming development team’s plans for the rest of the year.

T

he e-gaming sector has led the Isle of Man into a fourth decade of unbroken economic growth, with the Island’s Gross Domestic Product rising overall by 4.5% to £4.3 billion. What is the key to this success?

Strategies should never be cast in stone; they always need to evolve as market conditions change, and we have seen a seismic change in those conditions. The Isle of Man recognizes that the effects of this change will be seen in an increasing number ofM&As both with operators and supporting software and service companies.

Our strategy is therefore evolving to take these changes into account and to recognize that, in future, successful operators will need to be licensed in a number of jurisdictions – not just one. We have a healthy mix of world leading brands, high growth emerging future stars and start-ups and our strategy involves supporting each of these areas and helping them to grow.

We also expect continued diversification of the sector on the Island. We have always attracted and supported all aspects of the industry. We are the home to world leading gaming operators, platform and software providers, game developers, data centers and hosting companies, corporate service providers as well as lawyers, accountants and consultants who specialize in the industry. This clustering effect is healthy for our Island’s economy – over 30 years of continuous growth is almost unheard of elsewhere in the world.

The diversification of the sector on the Island has developed over time following on from our being at the forefront in creating legislation regulatory framework for e-gaming, and putting player protection at the heart of everything we have done.

Isle of Man is home to a growing number of businesses that accept Bitcoin. What are the benefits of this payment method? Do you believe worldwide bitcoin legislation is necessary?

Many sectors are beginning to recognize the real benefits digital currencies such as Bitcoin can bring them. Based on the blockchain technology, the first applications that have been developed allow the transfer of value between parties on the internet without the need for a financial intermediary. Gaming companies were amongst the first to realize that this approach could not only reduce payment processing costs dramatically but also remove the major issues that "charge backs" cause with card companies.

We are aware that there are several alternative payment mechanisms including digital currencies which have been recently introduced and are gaining wide acceptance. This growth combined with the establishment of other cryptology technologies based on the block chain will produce a major impact on society, in general, and especially the e-gaming industry.

The Isle of Man has a strong track record of recognizing the potential of major innovations and establishing the correct regulatory and fiscal control processes and procedures around them to allow businesses to become established and thrive. E-Gaming of course is a prime example.

Over the past year, our forward thinking approach to digital currencies has resulted in a clustering effect, attracting both industry participants and their supporting technical ecosystem to the Isle of Man.

The government designed the regulatory regime for online gaming a decade ago. How this helped to legitimize the entire sector?

Our approach to legislation has always been to protect the individual and to keep crime out. Our gaming controls achieve this by insisting that players’ funds are completely segregated and protected so that if a gaming license ever experienced problems then players would receive back their balances.

Strict controls over the quality of gaming operators' systems, controls and adherence to protect against Money Laundering are also in place. In addition the products that operators offer are scrutinized and checked thoroughly.
Our license holders who set up their Head Quarters on the Isle of Man offer products to many other countries where this is allowed. Often they will need to also apply for additional licenses in some of those countries while others do not yet require this.

When countries then create their own licensing systems or amend them, as the UK did recently, we co-operate as much as possible with those countries and have also amended our own legislation to help our licensees.
This approach has attracted many large operators, suppliers to the industry and those with excellent new product ideas to set up their Headquarters and grow their staff on the Isle of Man where they can create a permanent establishment and take full advantage of an excellent technology infrastructure.

The merger of Isle of Man's Paddy Power and Betfair could potentially create the world's biggest online gaming company. With so many companies merging, is the merger/acquisition opportunity a good idea? What are both the pros and cons of an online merger?

We have seen a large increase in M&A activity both in the licensed and the supplier sectors. Investors are demanding business plans that demonstrate an ability to make sustainable profits in spite of additional taxation on profits made from UK players.
The global gaming industry has witnessed an unprecedented level of consolidation fuelled by cheap debt, with a succession of mega-mergers and acquisitions involving the supplier heavyweights.

Economies of scale are vital to survive in an industry where margins are now under real pressure both online and in bricks and mortar operations. To start up, survive, grow and thrive companies will need a really engaging and novel proposition along with a robust and defendable financial plan. Such companies are around, but those start-ups with just a "me too" sports book or casino offering will struggle to raise investment or become profitable.

It is inevitable that all offshore jurisdictions will see the loss of a number of existing licensees who have not reached their economic goals, and may be forced to either sell up or close down. However, what is exciting is that we are seeing an increase in the number of quality, very well-funded new companies and those with really innovative intellectual property (IP) registering on the Isle of Man. We are hosting visits from companies with better and often unique business ideas, with more robust financial plans, more realistic marketing budgets and most importantly investment in the right order of magnitude to succeed in a very tough market. These companies are coming from the four corners of the globe including, of course, the Asian market where we already have an excellent reputation, but also from the emerging markets in the Americas, Africa and the Southern Hemisphere.

How do you see this sector developing over the next few years?

A key trend will be the potential opening up of new geographic markets and new ideas. We are anticipating the opening up of opportunities in South America and Africa and additional activity from the Asian market. We also believe that there are some new, innovative products and ideas being produced which could take hold and create a real buzz in the gaming community.

These ideas will create new IP and could attract funding and development resources to meet so far un-met player demand.
Finally, we expect to see the further expansion of alternative payment mechanisms into mainstream gaming operators. This will help to substantially reduce the cost of processing payments and eliminate charge backs which will be music to the ears of the aforementioned pencil sharpeners. The Isle of Man has led the move to implement legislation changes to make sure that we continue to keep crime out and protect the individual whilst enabling operators to move into this new area.

What are the country's future plans? What about the e-Gaming development team?

As the industry continues to diversity, we will continue to look for opportunities in new markets where we have already established an excellent reputation given our attractive tax structure, our world class power supply and telecoms infrastructure, and open minded government. We also see South America and parts of Africa ready to open up for e-gaming and these are areas where our expertise will be of great interest in the near future.

Non licensed businesses are also of interest to us. This has always been part of our strategy and will continue to be so. Those businesses that have already established themselves on the Island and have grown dramatically are testament to the benefits that we have to offer. This creates substantial numbers of new jobs on the Isle of Man and supports the growth in our economy.
One constant that really can be bet on is the Isle of Man’s firm and fair stance on regulation and gold standard in measures to protect players and their funds. We are extremely well placed and prepared to navigate the changing industry landscape that lies ahead.

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